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Colorado ranchers, sportsmen propose buy back of oil-lease land

A local rancher pauses to look over the Lake Ridge area in the Thompson Divide. This area is part of a 30,000-acre parcel that Houston based SG Interests has proposed to drill. (Special to The Denver Post)

Colorado ranchers and sportsmen have hatched a novel plan to protect 220,000 acres of high-country public land from oil and gas drilling: Buy back the leases from energy companies.

The opening offer — $2.5 million, or $2 per acre, the amount the companies paid for the leases when they were auctioned by the Bureau of Land Management nearly a decade ago — was rejected as too low.

But the Thompson Divide Coalition says it can raise as much as $50 million to buy nonproducing leases and protect an area spanning five counties south of Glenwood Springs that supports the region's robust tourism and agricultural economies.

Theirs is a free-market alternative to complex litigation and the confrontational battle now being waged by Front Range anti-fracking activists.

"These leases aren't a game-changer for the industry but are a significant game-changer for our ranchers, hunters and communities," coalition director Zane Kessler said. "We want to make companies whole on their investment — and preserve this area for hunters, ranchers and recreationists."

Free-market preservationists also are pursuing buybacks in Wyoming and Montana — other places where the nation's push to expand domestic energy production collides with ranching, tourism and fast-growing recreation economies.

Despite the deluge of presidential campaign promises to boost oil and gas drilling, energy companies face firm opposition around the West as they seek access to cherished public land.

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The core of the Colorado concept — endorsed by Garfield, Pitkin and Garfield county commissioners — is that the economic value of pristine mountain land outweighs the value of oil and gas that could be extracted.

For years, Carbondale-area descendants of ranchers and coal miners have been building a resilient economy "that isn't in the boom-bust cycle," said Mayor Stacey Bernot, a coalition member.

The buybacks of leases, however, require congressional help — because under current law, buyers of leases must show they would use the land productively.

In October, Congress passed legislation enabling an $8 million buyback in the Hoback Basin south of Jackson, Wyo. — but the money hasn't been raised.

"When leaders in the local communities asked us to engage, we held several productive conversations with local residents, ranchers, businesses and leaseholders that were focused on finding a path forward that works for everyone involved," Bennet said. "This area supports a diverse range of economic activities from ranching to hunting to world-class skiing and more. I look forward to seeing community members' comments and to continuing to work closely with them."

Antero Resources, Encana Oil & Gas, Falcon Seaboard Oil and Gas, Gunnison Energy, SG Interests and Willsource Enterprises hold most of the 61 Thompson Divide leases, which the coalition says account for less than 1 percent of the available leases on public lands in Colorado.

The U.S. Forest Service owns the surface land — located south of the Sunlight ski area and west of McClure Pass — much of it designated "roadless" under a recently upheld national rule aimed at protecting pristine forests.

Only Encana and SG Interests replied to the coalition offer. Both declined.

SG Interests officials told coalition leaders, "We could be sitting on a billion dollar play," Kessler said. "It's been as terse as that."

SG Interests vice president Robbie Guinn said Tuesday that he appreciates the respect shown for industry interests. While Guinn wouldn't make a counter offer, he said he wouldn't rule out talks.

"Once we acquire a lease like that, no matter what we paid at the auction, we look at it from a resource perspective," he said. "This is worth a whole lot more than what they offered."

No new wells have been drilled on the 220,000 acres since the leases were sold. A pipeline runs along the western edge, and Kessler said there are a few storage wells and a few that have been abandoned within the area's boundaries.

Houston-based SG Interests recently secured permits to drill two and in the next few weeks will apply to drill five more, Guinn said. The company also asked BLM land managers to "unitize" leases so that, if one is developed, others automatically would be extended.

Otherwise, many of the leases in this Thompson Divide area are scheduled to expire next year.

"I just don't have a counteroffer to make," Guinn said. "We would have to take a harder look at what these leases are worth."

A combination of funds from foundations and coalition board members, including Sue Anschutz-Rodgers and Avalanche Ranch owner Chuck Ogilby, easily could raise $50 million if the leases were worth that, Kessler said.

Preserving the high country "is critical for our operations," said rancher Bill Fales, whose family has run the Cold Mountain Ranch near Carbondale since 1924. Ranchers anchoring the region's agricultural economy rely on federal permits allowing sustainable grazing in the high-country — grazing that they say could not be done amid drilling.

"We would have nowhere to go with our cows," said Fales, whose wife, Marj Perry, is on the coalition board.

The area also includes a key migration corridor for lynx, moose, bear, deer, elk and mountain lions — and two Colorado Parks and Wildlife game units in which 14,000 big game hunting licenses are sold each year. A Sunlight to Powderhorn snowmobile route traverses the forests. Rock climbers, cross-country skiers and fishermen flock here for recreation.

"Does it make sense to jeopardize this by developing oil and gas?" Fales wondered.

Thousands of wells already have been drilled across Garfield County, with more in other western counties. Production of oil and gas from those wells is projected to double in the next 20 years, he said.

"We just think this one area has so many other values for our economy," Fales said.

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